 Investments imply putting aside your savings into equity, mutual funds, real estate, commodities, and business with an intention of capital appreciation, that is wealth accumulation, over a preset tenure, short, lead, or long, which is based on individual preferences. Investments are great tools for growing and accumulating your money. However, it is important to keep some basic things in mind before making investments, given that it is not possible for someone else to define your goals and choose a napped option for you. I will give you a key point test which will help you in your investment judgment. Welcome to Business Insights and Plus TV Africa. I am Justin Atadounia. My guest is the CEO and co-founder of Ice Town Development and Investment, a fast-growing real estate development company with five estates to her name in Lagos. Hassan is a certified real estate entrepreneur from Metropolitan School of Business Management, UK and alumni of Lagos Business School. He was recently inducted a fellow by the Institute of Oil and Gas Research and Hybrocarbon Studies. Welcome Dr. Hassan, he's now at the Business Insights. Thank you, thank you for having me. Yes, in my intro I just said investment could be short, made, or even long term, but then before you get into an investment you should be able to know what you want. But let's just start on a general level and ask this pertinent question. How does investments work? Okay, thank you for that question. So investment basically has to do with buying an asset or an item in order to make profit in the long run. So in other words, investment or in a layman term simply means buying an asset or an item at a lower price and selling at a higher price. So how that works basically is you look at the different asset class or investment vehicles available and you put in your monitor for you. Alright, most times we hear about due diligence and of course we need to understand what it is and why it is important for investments decisions. Okay, so when trying to put your money in any venture due diligence is very important and due diligence is an intelligent investigation into that asset class or that investment scheme you wish to put your money in. So what do I mean by intelligence investigation? You just don't have to use your own knowledge or what you think you know and finding out if that investment scheme is right or not right for you you need to consult the expert in that field to give you the sort analysis that's the sort analysis in that particular industry so that you don't make a mistake. Okay, let me just take it one step further before we talk about personal road map. For instance, you talked about hiring those who are very, very experienced in such investment fields. So for instance, do I really need to do that for almost any investment that I need to make? For instance, I am a small business owner and I feel that I'm making some sort of profit and I don't want to plough it back into my business for now and I want to invest let's say in some venture. Who do I really need to go to that can advise me if I should go into the capital market if I should go into mutual funds or if I should just invest in government bonds really? Okay, so the kind of person you consult for due diligence or to get knowledge or information about any type of investment depends on the investment class investment portfolio. We have the digital portfolio which has to deal with the Bitcoin, the cryptocurrencies we have the stock portfolio which is the stock and equities and the likes and we have the real portfolio. So for instance, if you want to go into a real investment you will have to consult people who are in the real estate field. You will need definitely a surveyor, a lawyer and an experienced realtor. Now I noticed from experience people going into real estate that consider inspection of a property as due diligence. That is not due diligence. Due diligence involves taking coordinates of that property and chatting is to find out what does the government have for that location. So that's the beginning of due diligence. So basically the choice of the advisor depends on the type of investment you are going into. Alright, moving on right now some experts would say that they need to draw a personal map or some sort of road map before you get into investment decisions. What does that really mean? Okay, so if you are looking at growing your wealth you definitely have to have a road map and this road map can be broken into five phases. Phase one is a learning stage where you learn about that investment. Please don't put your money in any investment that you don't understand at least 70% of what that investment is all about. Some of us will just see something and because a friend said he has done this and he's doing this, you're just going to eat with zero knowledge. Please don't put your money in anything that you don't really understand. So you are, it's divided into five phases. The learning stage, where you need to know about that investment, the activation stage that's where you start practicing. You start practicing what you have learned then when you now see that, oh, your knowledge in that investment is growing I'm going to expansion. You go into expansion and the last stage you go into accumulation and reinvestment. So it is very important to draw a financial map when going into any investment. In fact, what that will also help you do is that you will know your exit strategy. Every investment has an exit strategy. Don't just go in putting money there and just keep waiting until one day you wake up and you see that there's nothing there. For instance, the resistance that happened with the crashes that happened with one of the major crypto exchanges. So many of them are going to also go that way but we will not mention them. A lot of them are also going to go into bankruptcy this year. So you need to know your exit strategy with a very good personal plan that you map out for that year investment. Alright, let's talk about this exit strategy before we move on to other questions right now. So you are going into an investment with a clear core tab sense that you are supposed to make this particular profit or yield in this particular time. So would you need to fix an exit or some sort of a way out when that particular time is not really reached or how does it really work? So how does this work and let's look out for instance in the financial markets before you place a trade you are being asked how much is the amount of money you want to risk and how much is the amount of money you would like to make. So it means before even taking or placing a trade you are automatically defining your risk and defining your reward. So the exit strategy is very very important even before you go into the business for instance those who buy real estate you know from the onset okay this property that I'm buying this investment property that I'm buying I'm going to hold it for the next 10 years because there is a map that has been drawn that in that 10 years there is this amount of money I make and there is this amount of money I need you know so with this particular property class if I put in my money in that 10 years time it will grow to this money I'm looking for. I understand. So right from the beginning you need to define your exit plan it's very important. Right still talking about financial outlay and financial outlook do you also need to analyze your current financial situation before going into any investment because some people feel that if they don't really have so much they should not be thinking about investment or some sort of investment decision where others might not really look at where they are at the moment they think they might need to get some sort of maybe equity or borrow funds to also invest how does this really work? Some people think that before you can go into an investment you have a lot of money to go into such investment but realize with time that one of the easiest way to raise money for any investment is saving where in a country or in a part of the world where saving culture is not really practiced but you know a lot of people before the money comes in is already spent so no matter the kind of income you are making or whatever the kind of business you are making it is necessary and important that you have a little percentage 10% 15% depending on your strengths and you will be saving it now saving is not actually an investment but is a key to going into an investment now when you save up that money you can then go into an investment that can or that that money can carry for instance you can start with stock you can start with stock if you like real estate you can look at developing locations and have potential and put that money there you have one million, save two million and that's safe until you remove it from your bank and put it into maybe land banking okay with time so your financial situation yes so that you can know how to get to where you want to go and saving is one of the ways you can use to get money to go into an investment and there are other ways you can use OPM or that people's money but is always risky to go into businesses that you don't have proper knowledge for as I said earlier because if you are not informed you will be deformed in person you talked about investment in the capital market you talked about the stock exchange you talked about equities there was a time I remember sometime in 2005 2006 the stock exchange in Nigeria was really in a boom lots of people actually invested so much in this securities but at the point as though it lost its value and then the interest or the yields were not really coming in like before and a lot of people are looking at investing in the stock market as some sort of an investment would you really think it's advisable right now if you were to advise to invest in the capital market this is a very hot question like you are putting me on the hot seat to give you a financial recommendation so what I noticed any kind of investment is that by the time it becomes news then it is already late that was in 2009 2006 when the stock market boomed and it became news a lot of people came in and put in their money and lost it in the long run so what happened is from insider information there are some companies that if they want to list for instance at let's say 10 nera per share they are calling friends close friends to a private equity placement and those ones can buy let's say at 2 nera now by the time it is listed officially and it became news some people have already made 8 nera per share so if those investors decide to pull out their money in crypto they call it rock pool rock pool if they rock pool then the investment go down so I will not tell you that this is the right time to put your money into stock or whatever your investment as I said earlier you need to know or consult people who are in that field so that you will be properly guided but from my little experience real estate if done wisely is a very good investment by whom you are still watching business insight and plus tv africa we will take a quick break we will have Dr Ismail with us we will return and we will be looking at him risk appetite and how you evaluate your comfort zone in a moment to join us again welcome back it's still business insight and plus tv africa we are looking at investment decisions investment plans and what you need to do before you actually make such investment this is Dr Hassan Ismail thanks for staying with us Dr Ismail before we went on that break we are talking about real estate but we will come to that in a moment let's talk about risk appetite some people would say from elementary economics we hear that the higher the risk the higher the yield or the returns as it were so how can you evaluate or measure your appetite for risk and how do you know what your phone actually lies so it is said that the younger you are the more risk you should take because you have a lot of time to experiment and do a lot of things but once you are from 31 and above you need to be cautious that's why you notice that the elderly the elderly people they are more conservative in their life so if you tell them there is an investment that can give you up to 20% return on that investment they are already like no I am not going into that so your age determines your appetite the younger you are the more likely it is for you to go into high risk investments with a high reward so before the pandemic a friend took me to somewhere in Leki they said they are into Porex a lot of us know them and one of them came and told us we could make up to 30% of any money we invested I asked some questions and I realized they are into the financial markets speculation you cannot guarantee the actual return now someone is here guaranteeing me a particular return in speculation so I told my friend me I am not interested but he went and put in I think about 5 million era and as you know the rest is history but thank God he is still young as a man is someone who is 60 or 70 years old you will run into hypertension so your risk appetite is basically dependent on how old you are the younger you are the more likely you are to take investments with high risk high return but in general in your portfolio you should have a mixture of the high risk, the low risk and medium risk let's move on and talk about distribution of investment you have spoken so widely and so elaborated when we talk about real estate investments but some people would want to have a basket of investments where they can have an array of various plants so how do you can see that the mix where you should invest should I invest some in real estate should I invest some in bonds or do I just invest in them low risk government securities just how do you consider the distribution of your investment okay so as I said earlier that there are basically three categories of investment and vehicles we have the portfolio portfolio investments we have the digital investment and real investment portfolio investments have to do with stocks, equities and bonds now in portfolio investments there is also they have different risk attached to them like the bond is one of the investments that have the low risk in portfolio investment then the digital there are also low risk digital assets that you can invest in one of the safest is the real investment which has to do with real assets like real estate commodities, gold precious metals so in all of these three you need to find a way to distribute your portfolio of both high risk medium risk and low risk now from experience real estate went down well a low risk investment with do a tech time to match all but is one of the low risk investment then government bonds and equities also thank you real estate let's talk about it for one minute a lot of people are talking about investing in landed properties or just buying houses outright and reselling over time but some people like a school of thought will believe that you need so much before you can actually invest them in real estate how true is that okay so there is something called tokenization which is which derives word from suchetization is breaking into small things just like case study of when sachet mick came into existence by cowbell so they discovered that let's not mention brands tokenization is one of the strategies that have been adopted into real estate and tokenization came from suchetization you bring a big stuff divided into portions so that people in the lower stage can have access to it so that same process has been brought into real estate where people can own or invest in properties so for instance plot of land going for 10 million error the developer can decide to partition it for 4 people 5 people or 6 people so for 5 people all you need to bring is 2 million error and you could own that property same also happen for houses you can buy a house worth 100 million error for the purpose of generating rental income so if 10 of you contributed money equally to buy that property you can be earning return the rental income from that property based on your contribution and that for that property you can set up an SPV a special proposed vehicle to manage that transaction so that your equity in that SPV will determine the amount of money or the interest or the amount of rental income you get from that property so also in real estate we are seeing a lot of tokenization by aspect of co-ownership in this investments alright fine as school of thought says that one should be careful of investing heavily in shares of our dear employers or individual stock is that true? that is very true I'll give an example there are some financial houses you can't borrow money from a financial house and say you want to use that money to buy shares of that financial house it's because of this reason because they believe an individual or whatever should not invest heavily in a stock in fact if you invest heavily in a particular stock it's like you are putting your ads in one basket so portfolio diversification is very very important don't put all your ads in one basket as I said earlier you should have a mix of high yield medium yield and low yield investments alright as we begin to wrap up right now would you say there is a specific time a good time or a right time to actually invest? yes there is a good time there is a specific time to invest and that was 20 years ago and the next best time is now so you look at your current financial situation and look at strategies or the entry points you can use to start investing in fact you can start investing with as little as 50,000 error depending on the asset class you want to go into and that can be true using some apps that can automate your savings so that when the savings grow to a particular amount of money you can move that money into an investment you don't have to have all the whole money in the world to start investment because if you cannot save one error out of your 10 error today if you have 10 billion error tomorrow it will also be difficult but what this will do for you is that you are developing investment culture or investment mentality which is also going to help you in the long run thank you so much Dr Ismail for all of the input and of course the insights that you have given on today's edition of the show we do appreciate it thank you for having me alright and that's the size of the show for today we urge you to make the investment until you have so much you can actually start small but remember there is low risk medium risk and high risk your risk before you actually invest thank you so much for being a part of the show I am Justin at Cadone Business Insight returns to your screens again same time next week bye for now